 Mark Smith is the president and CEO of Largo Resources. Mark, welcome to the Investory Intel Studio via Skype. Great to be here Fred. Thank you for the opportunity. You've got a great story in Vanadium just for the benefit of those of us that don't deal with Vanadium on a regular basis. Could you explain its uses please? Vanadium is actually quite widely used in the economy and has just literally hundreds and hundreds of uses but I think to just kind of quantify it easily so that people can can feel like they understand this market better just think of Vanadium as something that strengthens steel and over half of the Vanadium that's produced in the world today is actually used in the form of Rebar which provides seismic protection and you know strength and and safety for us as human beings and that's one of its obviously one of its largest uses. The second largest use would probably be in steel tools and again it's all about making that steel tool hard and stiff and strong so that when you and I are chiseling something or grinding something you know we've got a very hard material to work with which makes our job a lot easier. We've been accustomed at Investory Intel of hearing stories about strategic metals and industrial metals being controlled in one market and being consumed in another market. What are the supply and demand geographic logistics for Vanadium? Vanadium is a little different than some metals in that there's basically four countries that produce the material so it's a little better than some a little worse than others but the four countries that produce Vanadium today China produces about 50 to 55% of the world's production. The second country in terms of large production used to be South Africa but through some bankruptcies as a result of the resource industry and tough times for Vanadium pricing last year we've now probably made Russia the number two producer in the world and it's probably 17 to 20% or so. South Africa and Brazil are roughly tied in terms of their capability to produce and we're probably somewhere in the 10 to 12% each in those categories so the problem with that Fred is of course the numbers don't add up to 100% and that's largely because China is actually higher than 55% right now as a result of the South African material coming off the market so China will be upwards of close to 65% at this point in time. Now your deposit and your in-production you've been in production commercially since the last quarter of calendar quarter of last year you're unique though you've got the largest resource and the highest quality now this is this is an unbelievable resource and one of the things that I like to do as both an investor and an executive is to start out with you know having a world-class resource before I engage in any of anything with any company and Largo clearly meets that standard I mean this this this resource at our America mentioned mine in Brazil is massive 45 kilometer long strike length 150 meters wide we only drill down to about 350 meters and we've got a very continuous homogenous ore body in this area so this is a massive massive ore body it's it's the clearly the highest ore grade in the world and as a result of that high ore grade we're actually seeing two very important things that benefit Largo and its investors to a great extent one is that the unit cost of production at our Brazilian mine is we think the lowest in the world there will be people that want to argue that point but we think that we've got some of the lowest cost production in the world the second point though which is is really becoming quite fascinating to us as a company is the quality of the material that we're producing is really outstanding and arguably is probably the highest quality vanadium being produced in the world today that has a whole bunch of really interesting aspects to it because when you get into the high quality material and the high end uses that that high quality deserves you're now talking about a bigger margin so if we get higher margins for our material and we continue to have low unit production costs we have a massive world-class deposit I really like that combination of things coming together as an investor and an executive of Largo well a couple of points one just quickly investors like to see the principles have skin in the game and you have skin in the game I do I'm probably sixth or seventh largest shareholder in Largo and I'm in it for a reason and that's because it is a really really fantastic deposit fantastic people and we're now operating the way we want to operate well if I read your reports correctly you brought the cost down from the first quarter of production to the second quarter production by 19% that's correct Fred but the thing I like to point out to people is that that 19% reduction on its own is quite impressive keep in mind that that's being done in a country where the inflation rate is over 10% all of a sudden that 19% reduction becomes even more meaningful so that's that's the caliber of people we have in this company we're really proud of our operations well Brazil has been in the news not only because of the Olympics the mining jurisdiction for those that don't know it's pretty strong jurisdiction for mining very strong jurisdiction it's a it's a it's a the state of Bahia is where we're located and there are several mines that have historically been in the area so the regulatory and the permitting systems are all very well-defined they're very reasonable they're very predictable very reliable and we have had really zero issues in terms of any permitting down in Brazil we find it to be a very technically competent organization that reviews our applications and issues decisions not not many of us have access to pricing on vanadium in the spot market could you just characterize that in the last couple of years please yeah well actually I'm going to go way back further than that Fred but you take a look at the last 30 years of pricing for vanadium it's roughly about five dollars a pound on a v2.05 basis of vanadium pentoxide basis the last 10 years that number has been about six dollars and 47 cents a pound so we got to keep those two things in mind the last year in 2015 pricing in most of the resource sector of course was impacted negatively and vanadium was certainly one of those vanadium actually hit a 12-year historic low of pricing of $2.25 a pound in December of 2015 so I'll come back to that issue in a little bit as we as we talk more about Largo but that low pricing environment clearly had impacts on the supply side of supply and demand now we're looking at prices more in the 350 to 375 a pound range but because of what happened in the supply side of the market due to those low prices the the supply and demand equation has changed quite dramatically demand has stayed right about where it has always been so it's actually very dependable very reliable what we're seeing though is on the supply side because of bankruptcies which were caused by low pricing we're seeing about 15 to 20 thousand tons less production in a market that needs you know 90 to 95 thousand tons a year so the the story into vanadium industry is truly the supply side and that's why we're even smiling bigger at Largo right now because we we've got the best position we think of all the producers in the world in terms of ore grade or deposit ability to produce at low cost and ability to produce a high quality product mark thanks very much Largo resources has been doing extremely well on the TSX this year so far and we look forward to hearing more news from you and the company well thank you friend just a quick a quick spiel for the TSX it was fantastic to be graduated up to the TSX on July 4th of this year and we really think that that adds additional credibility to the company and its future and we're really proud and happy to be a member of the TSX so thank you for the opportunity today and look forward to speaking again soon